Europe's AI Innovation Wave: Who Gains, Who Decides, Who Governs?

Abstract

This paper asks how Europe should respond to the current wave of artificial intelligence. It argues that AI is best understood, at least for now, as a rapidly developing cluster of technologies within the wider information revolution rather than as a separate industrial revolution. The evidence on its economic effects remains unsettled. Productivity estimates vary widely, investment has moved ahead of what can yet be justified by measured gains, and the labour-market evidence points more towards the reorganisation of work than towards mass unemployment. These outcomes will depend less on the technology alone than on how firms deploy it, how the gains are distributed and what institutions shape adoption. Europe enters this transition from a weak position in frontier models, compute, cloud infrastructure and private investment. A credible response therefore requires more than regulation. It should combine conditional support for European firms, public investment in data and compute, stronger administrative capacity, labour force participation in deployment decisions and procurement rules designed to limit long-term dependence on foreign platforms. The paper also argues that part of any productivity gain should reach the workforce, through shorter working time and wage growth, rather than being captured only as lower labour costs and short-term capital gains. The central claim is that Europe's AI future will be decided not only by technical progress, but by ownership, institutional design and political choice.

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DOI

10.2139/ssrn.7309619

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https://papers.ssrn.com/sol3/papers.cfm?abstract_id=7309619

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